Correlation Between Senheng New and AMMB Holdings

Can any of the company-specific risk be diversified away by investing in both Senheng New and AMMB Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Senheng New and AMMB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Senheng New Retail and AMMB Holdings Bhd, you can compare the effects of market volatilities on Senheng New and AMMB Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Senheng New with a short position of AMMB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senheng New and AMMB Holdings.

Diversification Opportunities for Senheng New and AMMB Holdings

0.63

Correlation Coefficient

Senheng New  AMMB Holdings

Poor diversification

The 3 months correlation between Senheng and AMMB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Senheng New Retail and AMMB Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMMB Holdings Bhd and Senheng New is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Senheng New Retail are associated (or correlated) with AMMB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMMB Holdings Bhd has no effect on the direction of Senheng New i.e., Senheng New and AMMB Holdings go up and down completely randomly.

Pair Corralation between Senheng New and AMMB Holdings

Assuming the 90 days trading horizon Senheng New Retail is expected to under-perform the AMMB Holdings. In addition to that, Senheng New is 2.0 times more volatile than AMMB Holdings Bhd. It trades about -0.05 of its total potential returns per unit of risk. AMMB Holdings Bhd is currently generating about 0.07 per unit of volatility. If you would invest  374.00  in AMMB Holdings Bhd on September 29, 2024 and sell it today you would earn a total of  174.00  from holding AMMB Holdings Bhd or generate 46.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Senheng New Retail  vs.  AMMB Holdings Bhd

Senheng New Retail

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Senheng New Retail are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Senheng New may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AMMB Holdings Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AMMB Holdings Bhd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, AMMB Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Senheng New and AMMB Holdings

The main advantage of trading using opposite Senheng New and AMMB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senheng New position performs unexpectedly, AMMB Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AMMB Holdings will offset losses from the drop in AMMB Holdings' long position.

The idea behind Senheng New Retail and AMMB Holdings Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.